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A trade mark is a mark which is used in the context of goods as well as services for the reason of showing a relation in the field of trade between the goods or services and any person possessing the right, as the proprietor, to make use of the mark.[1] In India, the Trade Marks Act, 1999,[2] is the legislation which governs the use of trade marks in the country. It deals with the registration as well as the protection of trademarks for goods as well as services from being used in a dishonest manner through fraudulent marks. By registering a trademark, a right which is exclusive in nature is conferred for the usage of the trademark, a registered one, with the sole objective of using the trademark in an exclusive manner by the owner or by any other licensed party for using it in exchange for monetary benefits.[3]
The fundamental objective of trademark law is to prevent the sellers from creating any sort of confusion, whatsoever, within the consumers, regarding the actual origin of the products as well as their authenticity. This kind of protection granted by the trademarks is important to build confidence in the consumers with regard to the genuineness and origin of the goods they buy.
Doctrine of First Sale
Section 30(3) of the Trade Marks Act, 1999, establishes an important facet of trademark law and that is - when someone lawfully acquires goods bearing a registered trademark, any subsequent sale or dealing with those goods, whether by that individual or another person acting through them, does not constitute trademark infringement. This is correct even if the registered trademark has since been transferred to another proprietor, as long as the goods were initially marketed under that trademark by the proprietor or with their permission. However, Section 30(4) clarifies that this protection does not apply if there are legitimate reasons for the trademark owner to restrict further sales, particularly if the goods' condition has been altered or impaired after their initial sale.
This provision under Section 30 introduces the “Doctrine of First Sale,” an important principle in trademark law that limits the trademark owner's rights once their products are initially sold. It allows the resale of trademarked goods, such as those with a brand logo, provided the items remain in their original condition as when first sold. This doctrine protects resales of genuine goods without modification, ensuring that the authenticity and origin of the product remain clear and unambiguous. Once the trademarked goods are lawfully sold by the owner or with their consent, the trademark owner's control over further resale ends. Therefore, subsequent sales do not constitute trademark infringement, as there is no confusion about the product's origin.
Altering of Products: Antithetical to the First Sale Doctrine?
The question which arises is - what if a reseller alters or tampers with an authentic product which has the potential to mislead or confuse the consumers, such as changing expiry dates of the product? Will the same create confusion about the source and quality of the product and will it be an exception to the doctrine of first sale?
In Hershey Company v. Atul Jalan Trading as Akshat Online Traders,[4] the High Court of Delhi held as follows:-
“6. ……………if a reseller alters a genuine article in a way that could mislead consumers—such as changing expiry dates—then this would undeniably create confusion about the source and quality of the goods. Such actions can be seen as creating a “materially different” product, which can fall outside the protection of the first sale doctrine and infringe upon the trademark. In these cases, consumers might believe they are buying a product which is backed by the original manufacturer's reputation and assurances, when in fact they are not. Such misrepresentation has the potential of damaging the Plaintiff's brand reputation, while also deceiving consumers and endangering public health. Such circumstances justify the grant of an injunction to prevent further misuse of the Plaintiff's trademark and protect consumer safety.”
Again, in Hershey Company v. Atul Jalan Trading as Akshat Online Traders[5], the High Court of Delhi, held as follows:-
“The issue in the present suit relates only to Hershey's products. However, the scale of the Defendant's operations is bigger. From the events which have transpired, there appears to be a coordinated and a systematic manner in which expired products are being re-packaged or rebranded with new expiry dates, and are being introduced into the markets. From the statements made by the Defendant's representatives before the Court, it appears that a large quantity of goods especially on e-commerce platforms, which achieve expiry dates, are somehow purchased by unscrupulous persons, the manufacturing and expiry dates are changed and re-introduced into the stream of commerce. Moreover, it appears that the FSSAI is not fully able to file complaints and take action on an urgent basis in such cases. The matter requires urgent consideration and is beyond the scope of the present commercial suit.
This Court is convinced that the Plaintiff has made out a prima facie case for grant of an ex-parte ad-interim injunction. In light of the above stated it is also clear that balance of convenience lies in favour of the Plaintiff considering that the counterfeit packaging is used for expired confectionary products, which will be sold and consumed in bulk in this festive season of Diwali. This will cause irreparable loss/harm not only to the Plaintiffs business and reputation but also to the public at large.”
In Patanjali Ayurved Limited v. Masala King Exports Trading Pvt. Ltd. & Ors.,[6] the High Court of Delhi held:- “18……….It also prima facie appears that in case the Defendants No. 1 to 13 are permitted to alter the product in question, in the manner which is alleged to have been done, it would attract the provisions of Section 30(4) of the Trade Mark Act 1999. The doctrine of fist sale which cuts off trade mark owner's rights after its products are first sold would be limited to selling the branded item in the same condition when it was first sold. The acts complaint of, like affixing stickers and altering the entire list of ingredients/nutritional facts amounts to "materially" changing the product made by the trademark owner. This would certainly put the image of the company in peril and thus would contravene Section 30 (4) of the Trade Mark Act,1999.”
In Kapil Wadhwa & Ors v. Samsung Electronics Co. Ltd & Anr.,[7]it was held:-
“67. With reference to sub-section 4 of Section 30 of the Trade Marks Act 1999 it would be relevant to note that further dealing in the goods placed in the market under a trade mark can be opposed where legitimate reasons exist to oppose further dealing and in particular where the condition of the goods has been changed or impaired. With respect to physical condition being changed or impaired, even in the absence of a statutory provision, the registered proprietor of a trade mark would have the right to oppose further dealing in those goods inasmuch as they would be the same goods improperly so called, or to put it differently, if a physical condition of goods is changed, it would no longer be the same goods. But, sub-section 4 of Section 30 is not restricted to only when the conditions of the goods has been changed or impaired after they have been put on the market. The section embraces all legitimate reasons to oppose further dealings in the goods. Thus, changing condition or impairment is only a specie of the genus legitimate reasons, which genus embraces other species as well....”
Hence, tampering or altering of a genuine product has the potential to mislead consumers as such actions create a different product materially, which escapes the umbrella of the doctrine of first sale and the same infringes upon the trademark.
Right to Health
The unauthorized tampering of the food product is not only an infringement under the Trade Marks Act, 1999, but it also endangers public health in general. In Centre for Public Interest Litigation v. Union of India,[8] it was held that:-
“25. We may emphasise that any food article which is hazardous or injurious to public health is a potential danger to the fundamental right to life guaranteed under Article 21 of the Constitution of India. A paramount duty is cast on the States and its authorities to achieve an appropriate level of protection to human life and health which is a fundamental right guaranteed to the citizens under Article 21 read with Article 47 of the Constitution of India.”
Therefore, the upshot of the above discussion is that the doctrine of first sale gets restricted when the products are altered and sold in the market as the same misleads consumers and infringes upon the trademark. The altering of goods such as changing of manufacturing dates, expiry dates, etc., and then selling such goods or products in the market would violate the trademark owners' rights and constitute an infringement under the Trade Marks Act, 1999. These acts create a materially different product and violate the object of the trademark law in its entirety.
Authors: Vikrant Rana (Managing Partner), Nihit Nagpal (Associate Partner) And Muneeb Rashid Malik (Associate) At S.S. Rana & Co. Views are personal.
Sumat Prasad Jain v. Sheojanam Prasad, (1973) 1 SCC 56. ↑
Act 47 of 1999. ↑
WIPO on Trade Marks. ↑
Hershey Company v. Atul Jalan Trading as Akshat Online Traders, CS(COMM) 780/2023. ↑
Hershey Company v. Atul Jalan Trading as Akshat Online Traders, CS(COMM) 780/2023. ↑
Patanjali Ayurved Limited v. Masala King Exports Trading Pvt. Ltd. & Ors., CS(COMM) 107/2019 ↑
Kapil Wadhwa & Ors v. Samsung Electronics Co. Ltd & Anr. 2012 SCC OnLine Del 5172 ↑
Centre for Public Interest Litigation v. Union of India, (2013) 16 SCC 279. ↑